Lit Motors & A New Power in Personal Transport Case Study - - PowerPoint PPT Presentation
Lit Motors & A New Power in Personal Transport Case Study Jackson Wahl, Dhanush Madabusi & Scout Stohrer By submitting this deck of case slides, the members of our team affirm that we all participated in the analysis of the case and the
By submitting this deck of case slides, the members of our team affirm that we all participated in the analysis of the case and the creation of this document.
Analysis - Lit Motors:
Customer Value Proposition Tech/Operations Management Go-To Market Plan
~ Overall STRONG: combines safety, comfort, and space benefits of car with the speed, and maneuverability of a
economical than normal-sized vehicle. Offers older, former motorcyclists the ability to commute to work in a suit. ~ Weakness: U.S drivers need a “Class M” motorcycle license - requires passing test. ~ Low R&D: A lot of the new technology involved in the C1 had already been researched & developed for other innovations - like the segway. ~ Careful to respect and protect intellectual property ~ Originally planned for production to take place in U.S or Taiwan, and final assembly to take place in country where it’s sold. ~ Prototyping suggested technology would be feasible ~ Identified target customers: “Generation Jones” and young urban professionals. ~ Built brand around target customers - focused on creating lifestyle brand that represents C1 as the “rolling iphone”. ~ Careful to avoid being thought of as a “geeky” brand (like segway). ~ Plan to distribute 70 C1s to be driven around major cities, peaking the curiosity of
vehicle.
Quantitative Analysis:
**Note The following assumptions made in Excel calculations: Assumed hiring/salaries for 40 people wouldn’t take place until after the trial year. Assumed 5000 units was a large enough volume of production to reduce cost per unit. Assumed growth and tax.
suggested 74% of target customers would buy the C1 at 12K and 56% of customers would buy the C1 at 24K, we would assume Lit Motors would sell 1.3x more units at 12k.
Analysis - A New Power in Personal Transport:
Customer Value Proposition Tech/Operations Management Go-To Market Plan
~ Strengths: Provides cutting edge innovation, incredible gas mileage and energy savings. Drivers as young as 14 could use, meaning there is value for a larger customer base. Much cheaper
~ Weakness: Younger drivers of the cars on the road will make them less safe. Safety is an issue with the smaller and more flimsy car. ~ High R&D cost: Lots of prototyping and research went into creating most efficient model ~ Cars can be produced like appliances rather than vehicles making it cheaper and faster ~ Design of car made it so that extra battery could be put on vehicle, more power and range for user ~ Primary plan is massive 3-month $3M mail-order marketing campaign. ~Press advertising and television commercial advertisements used. ~Plan to use retail chains to sell vehicles, ~Using franchises for vehicle maintenance, and battery purchases, spare parts, to reduce cost to corporation.
Quantitative Analysis:
**Note The following assumptions made in Excel calculations: Assumed price of C5 car would remain $400 in 1985. Gain/Loss is a measure of selling current stock in 1984, and projected stock at assumed price in 1985. Since we were not given any more financial information about salaries or income from franchisees, analysis shows the results of the advertising campaign in 1984, and the net profit in 1985, assuming that each car would be sold at a 20% profit margin. In order to become profitable in 1985 at 20% margins, the company would need to keep SG&A and other costs below $6,002,800/
Lit Motors
○ Lit Motors was able to determine a target audience of older male motorcycle owners earning a salary above $100,000 and urban professionals around the age of 30 ○ Lit Motors can work to create as much brand exposure with these individuals as possible by their common interests in terms of stores and websites visited
○ Kim is best suited in leading the company in terms of creation and innovation and should delegate management responsibilities to more qualified individuals ○ New team members can focus on technology and operations with the goal of increasing levels of manufacturing ■ This can also be accomplished with new leaders competent in supply chain management
○ With proper delegation of work, Kim will free time to focus on perfecting the Cargo Scooter and finding investors ○ Revenue from the Cargo Scooter can be funneled to Lit Motors to assist operations and increase overall margins
○ Lit Motors faces competition from small cars, enclosed two- and three- wheelers, and motorcycles ○ Lit Motors should to promote the advantages of C-1 through advertising and better tailor their product for the needs of the consumer based on their competitor’s advantages Kim and his team have done well in terms of consumer, product, market, and company analysis, setting up the venture on a trajectory for future success and potential growth. Given our confidence in the team, its product line, and the projections for the company, we would invest in Lit Motors at this point.
A New Power in Personal Transport
○ At the time of launch, Sir Clive needed to further explain the C5 product to clarify customer misconceptions about its purpose and production ○ Through precise branding and advertising, the management team can promote the C5 without confusion to more effectively capture the attention of consumers and investors ■ This will help to lower customer acquisition costs and give Sir Clive and his team a better understanding of the customer response to the C5
○ To ensure future success and more effective advertising, Sir Clive and his team need to invest more time on solidifying its target market, product line, and customer value proposition ○ In doing so, Sir Clive and his team can create a product that satisfies a clear need of the customer ■ Remaining updated on changing legislations can also help development and possible customer acquisition
○ Determine if the product appeals to customers, compare possible price points, and eliminate safety concerns ○ Although the C5 follows all regulations, promoting a vehicle that requires no license or insurance with few precautionary safety measures seems like a recipe for disaster Sir Clive and his team are far from being ready to advertise their product to both customers and investors. The team needs to construct a cohesive brand, finalize their product line, and solidify their intended market. In addition, the team should be clear on the amount of equity offered to potential investors before accepting any funding. Given the number of concerns for the company, we would not invest in A New Power in Personal Transport at this point.